One of the great contradictions of investing in 2010 concerns the record high prices for gold. In the early portion of October, prices strained toward $1,340 U.S. per ounce intraday, which begs the question: if prices are so high, does it mean supplies of golden nuggets are dwindling lower?
The contradiction evidenced itself yet again on October 5, with the announcement that Toronto-based, Africa-focused Avion Gold Corporation (TSX-Venture:AVR) continues to notice that its shovels are digging more gold out of the earth. Third-quarter production from AVR’s Tabakoto/Segala operations in the West African nation of Mali registered more than 23,000 ounces of gold.
It’s an impressive number, made even more so by the fact that it represents an 89% improvement over the same quarter last year, and a 6% increase in production over this year’s second quarter. AVR’s gold production for 2010 so far has surmounted 61,000 ounces, with an eye to making that number at least 75,000 ounces – maybe even 85,000 – by year’s end.
More head-swimming numbers: in September alone, AVR processed more than 61,000 tonnes of ore, averaging 3.98 grams per tonne gold (g/t Au), with a 97.2% mill recovery, for gold production of more than 7,600 ounces. Not that that was a fluke; in August, the figure was more than 7,200 ounces.
Mali is the second-largest gold producing country in Africa, with two million ounces of gold produced in 2007. Gold projects account for approximately 80% of mining activity in Mali. AVR holds 80% of the Tabakoto and Segala gold projects in Mali, with the nation’s government holding the 20%. AVR bought the property from Nevsun Africa in May 2008, for $20 million U.S., and granted a 1% net smelter return royalty that is buyable.
The company, which commenced drilling there in the winter of 2009, says its longer-term goal is to ramp production to a 200,000-ounce run-rate in 2012.
Certainly, the company is putting a lot of its mining eggs in this West African basket, and nobody can knock the results. News of the once-more-proven richness of Tabakoto/Segala sparked traffic in AVR stock of more than 1.5 million shares, driving the price up past 75 cents per share at time of writing, in the upper shelf of a 52-week trading range that peaked around 83 cents last April, towering above the price’s basement of 27 cents, to which the stock fell late last October. Certainly, with gold prices confounding prognosticators by reaching higher into the stratosphere, things are looking up for this Toronto-based company and investors should take notice of this rapidly expanding Company.
