cannacord analyst Avion Gold* (AVR : TSX : $1.42), Net Change: -0.13, % Change: -8.39%, Volume: 3,342,932
Changes to the Mali Mining Code? Avion Gold declined as news surfaced that Mali is looking to increase the state’s share in
mining projects to 25% from 20% and that it would also trim taxes from 35% to 25%. A Bay Street analyst notes that Minister
of Mines had highlighted upcoming changes to the mining code last year so the market was probably expecting this. Further,
news releases indicate that existing contracts would not change, but regardless the net impact would be neutral Avion’s
estimated NAV. While the market is often easily spooked by potential taxation changes, it seems the market is overreacting.
Just last week, Avion Gold released an updated resource for the Kofi project (Mali) highlighting an 81% increase in the global
resource (M&I plus inferred) to 1.20 Moz from the previous resource estimate (2008) of 0.66 Moz. Canaccord Genuity Precious
Metals Analyst Steven Butler was impressed with the resource estimate, saying he had not expecting a significant increase in
the overall resource at this stage update. In particular, the Kofi C zone and the Betea zones are the largest contributors
accounting for 82% of the current resource (at a 0.5 g/t cut-off) and together larger than the current open-pit resource at
Tabakoto. The limits to mineralization at these zones have not yet been defined, highlighting the potential for further resource
expansion over the next several months. In the near term, exploration efforts will likely be focused on the higher grade Kofi C
zone located along the potential northern extension of the 17 Moz Loulo structural corridor. Overall, Butler views the likelihood
of material resource expansion at the Kofi project as being high over the next 12 months. Further, with most zones located
within trucking distance of the Tabakoto mill, he views development potential of the project as relatively high. While no official
timelines have been announced for a Preliminary Economic Assessment or Scoping Study, the substantial increase in the
resource likely warrants the completion of an economic study evaluating the potential for a stand-alone operation or as
additional mill feed for the Tabakoto mill (possibly justifying a further expansion from the planned 4,000 tpd level). Butler
reiterated his bullish stance for the resource update, saying he continues to see substantial re-rating potential and valuation
upside on successful delivery of the Tabakoto expansion and resource growth and de-risking at the Hounde and Kofi projects.