Avnel Gold Mining Limited

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Avnel Gold Mining Limited
TSX AVK, AVK.WT
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PRESENTATION DISCLAIMER

• Caution Regarding Forward Looking Statements
• Statements regarding the corporations plans
  with respect to the Kalana Mine and exploration
  of the Kalana Permit are forward-looking
  statements. There can be no assurance that the
  planned ongoing development of the Kalana Gold
  Mine will be completed as forecast or that the
  exploration program on the Kalana Permit will
  identify minerals resources.
• The TSX has neither approved nor disapproved the
  form or content of this information release.

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Emerging Gold Producer

• Canadian Main Board listed mining company
  operating in Mali
• Current production of 19,000oz p.a. rising to
  27,000oz p.a. _at_275/oz cash cost
• Currently defined resources of 1.0M oz, including
  428,000ozs PP Reserves
• Exploration success on 387 sq.km Permit close to
  mine
• Highly experienced management team

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Growth Strategy

• Increase annual production at existing Kalana
  underground mine to 30,000ozs at 275/oz by 2008.
  Potential to increase to 50,000 ozs per annum by
  2010
• Explore Permit and identify potential new ore
  resources, such as the Djirila discovery
• Convert Kalana open pit resources (3M tonnes
  containing 449,000 ozs) into reserves
• Construct new gold plant to process Kalana ore
  and new satellite ore resources- target 150,000
  to 200,000 ozs per annum.

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Mali - Overview

• Stable democracy
• Established mining code
• Several world class mines resulting from
  discoveries Sadiola, Loulo, Syama, Morila etc.
• Good infrastructure particularly at Avnels
  Kalana Mine site

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Permit

• Avnel owns 80 interest in Kalana Permit (mine
  exploration) in Mali (20 Mali Government)
• Unique 30 year mining permit for both Kalana Gold
  Mine and surrounding 387 km2 concession area
• No loss of property over permit duration - 30
  years to explore and develop - can be extended
• US2.5 million acquisition cost for mine and
  concession in 2003

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Morila
Guinor
Syama
Siguri
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Kalana Gold Mine Mineral ResourcesDecember 2005

• Measured Indicated Resources
• Underground veins 1,631,000t 14.2g/t
  747,000 oz
• Underground stockwork 247,000t 4.2g/t
  34,000 oz
• Open Pit 873,600t 7.12g/t
  200,000 oz
• Tailings 294,000t 2.04g/t
  19,000 oz
• TOTAL 3,045,000t 10.2g/t 1,000,000
  oz
• Inferred Resources
• Underground 429,000t 6.2g/t 85,000 oz
• Open Pit 2,261,000t 3.4g/t 249,000 oz
  
• Resources classified under NI 43-101

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Underground Reserves Dec 2005

• Proven 55,000t _at_ 15.8g/t 28,000 oz
• Probable 881,000t _at_14.1g/t 400,000 oz
• Total 936,000t _at_14.2 g/t 428,000 oz
• Reserves lie between 100m and 300m below
  surface.
• Reserves based on NI 43-101. The Reserves are
  included in the Measured Indicated Resources.

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Drill Holes - Veins 1,18,19,20
Surface
400rl
No 1 shaft
No 1 shaft
No 2 shaft
No 2 shaft
Kalana 1 open pit
Kalana 1 open pit
295 level
100 level
Vein 1
Vein 1
Vein 18
Vein 18
Vein 19
Vein 19
Vein 20
Deeper Veins 21,22 23 (not shown) are in the
indicated inferred resources
Vein 20
300 level
Deeper Veins 21,22 23 (not shown) are in the
indicated inferred resources
100 level
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Mine Operation

• Shallow underground mine (100m to 300m depth)
• High Grade quartz veins (1.4m width)
• Conventional mining with handheld drills, winches
  and 3t locomotives
• Grid electric power on site
• Gravity plant budget 79 to 84 gold recovery
• Production 2004 - 7,396 ozs 2005 -14,900 ozs
• 2006 estimate 18,900 ozs
• Focus on shaft deepening and mine development

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No.1 Vein o/crop
No. 1
No. 2
crusher
plant
Power grid
View of Surface Infrastructure
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Mine Operation

• Mine currently planned to produce over 26,000oz
  p.a. from 2008 to 2014
• Operating costs expected to drop US275/oz by
  2008
• Head grade expected to average 17.3 g/t with mill
  recovery (gravity only) of 79 to 84
• Mine grades are generally exceeding reserves
  forecast. Block Factor 170 in 2005
• Priority - open up new areas and deepen shafts

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1Shaft
2 Shaft
100
150
North
South
180
220
260
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Mine Development Schedule

• Deepen 2 Shaft to 190 level- Sept 2006
• Develop 150 level North to vein 18- Oct 2006
• Develop 180 level South to vein 18/18a- June 2007
• Develop 180 level North to vein 18/19- December
  2007
• Deepen 1 Shaft to 300 level- December 2008
• Develop 220 level South to vein 18/18a- September
  2008

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Higher Gold Grade Trend

• Grade increasing as mining dilution reduces and
  higher in situ gold values than reserves estimate
• 2004 10.6g/t
• 2005 17.2g/t
• 2006 25.0g/t (quarter 1)
• Ore Reserve Reconciliation (vein 1)
• 2005 actual grade 19.15g/t vs 14.4g/t reserve
  grade
• Block factor Au content 170 (70 more gold)
• Block factor tonnes 130 (30 more tonnes)
• 1985-2001Block factor Au content 130

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Key Sensitivity Parameters

• Business Plan
  Expansion
• FCF _at_375/oz 24M 39M
• IRR _at_375/oz 17 28
• FCF _at_625/oz 63M 101M
• FCF _at_10 grade 34M 52M
• FCF _at_625/oz 78M 122M
• 10 grade
• Free Cash Flow pre tax

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Mine Exploration and Development

• Underground drill program to increase data
  density (and possibly grade) for ore reserve
  blocks between 180 and 260 levels- scheduled
  2008/2009
• Infill underground drilling programme to convert
  inferred resources into indicated resources-
  scheduled for 2009/2010
• Assess optimum expansion potential of the
  underground mine
• Infill drill the surface deposits ( Indicated
  Inferred Resources 468,000ozs) and establish open
  pit designs- schedule 2008
• Investigate suitable mill size given potential
  ore supply from surrounding area

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Permit Exploration Strategy

• To find proximal resources to existing Kalana
  Mine
• and within the Permit- establish a Gold
  Camp
• Soil geochemistry is most effective first stage
  exploration tool
• To drill priority targets (9 gold anomaly targets
  identified on the 40 of the Permit area sampled)

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Exploration Results - Phases 1 2April to
December 2004

• 10 priority grids sampled
• Geochemical sampling results show significant
  Au-in-soil anomalies on 9 grids
• Au-As anomalies show good correlation
• Significant structures identified with 1km
  strike length and 200m width on 9 grids

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Location of Priority Grids
SOIL GEOCHEMISTRY GOLD ANOMOLIES
Kalana Mine 1,000,000 oz Mineral Resource
MI 428,000 oz Reserve (PP)
Kalanako 70,000 oz Russian Geological
Resource
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Phase 3 Significant drill resultsMarch- June 2005

• Two main gold-bearing zones identified new gold
  discovery on Grid 8
• Significant assay results including
• Djirila Main zone 5.4g/t over 36 m including
  73.6g/t over 2m 45.9g/t over 4m
• Djirila South zone 4.1g/t over 6m 8.3g/t over
  22m
• 6 holes ended in mineralisation
• One RAB hole intersected 8.0g/t over 4m on the
  Badani zone, NE of Djirila

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Djirila Main South Zone
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Phase 4 Significant Drill ResultsNovember 2005-
February 2006

• 15 diamond drill holes at Djirila Main and South
• Significant assay results include
• 11.14g/t over 24m from 68-92m in DDH02
• 4.81g/t over 10m from 136-146m in DDH02
• 14.57g/t over 3m from 98-101m in DDH06
• 19.3g/t over 2m from 46-48m in DDH11
• 12.55g/t over 19m from 80-99m in DDH11
• 5.72g/t over 2m from 120-122m in DDH11
• 3,04g/t over 7m from 120-122m in DDH12
• 3.74g/t over 14m from 98-112m in DDH13
• 3.14g/t over 3m from 113-116m in DDH14

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Djirila Main Zone

• Djirila Main has been identified by RC and DDH
  programs. It is a fault controlled,
  quartz-vein-stockwork zone characterised by high
  grade mineralisation between surface and 100m
• Zone is 225m long on a NNE strike and artisinal
  workings extend 150m beyond this zone
• Vertical to steep easterly dip
• 3m to 50m width
• Open at depth and along strike

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W-E Section Djirila Main
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Phase 4 February- July 2006

• RC drill program to build a resource base and
  test the continuity of Djirila Main Zone
• RC Drill gold anomaly targets on Grid 7, one of
  the 8 other gold anomaly targets on the permit
• 54 RC holes (5100m) are proposed
• Current drilling budget US388,000
• Extensive soil sampling programme over at least 3
  areas budget US150,000

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Phase 4 Geochemical Sampling Grids
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Management

• Executive Chairman Howard Miller
• CEO Roy Meade Mining Engineer
• CFO Andrew Herbert
• Mine General Manager Koos Grove
• Exploration Consultants Jack Hamilton Michel
  Mercier
• In Country Director Ibrahim Kantao (ex DG of
  DNGM)

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Current Capital Structure

• Shares Issued
  
• Public IPO 12,393,065
• Promoters 35,000,000
• Private Placement 7,936,000
• Issued for interest on loan 390,139
• Total issued 55,719,744
• Shares Reserved Can
• Warrants (5 year listed) 6,196,801 _at_ 1.06
• Warrants (2 year unlisted) 7,936,000 _at_ 1.30
• IPO Agents warrants (2 years)
  419,499 _at_ 0.76
• Private Placement Brokers warrants (2 years)
  1,117,200 _at_ 1.00
• Minority shareholder warrants 1,050,000 _at_
  US0.275
• Minority shareholder warrants 435,400
  _at_ 0.95
• Convertible loan note (5 years)
  13,427,476 _at_ 0.95
• CEO Compensation Options 2,500,000 _at_
  US0.275
• Stock Options 1,850,000 _at_ 0.76
• Total warrants/options 34,932,376

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Pre-Offering Capital Structure

• Elliott and Associates (fund management group)
  Fern Trust (family of Howard Miller, Chairman)
  equally invested 21 million to end of 2004
• 21.88 million capitalised 5050 into 35 million
  common shares and a 5-year convertible note
• 2.8 million bridging loan converted into a Term
  Loan due 31 December 2007
• Management and associates own 40 of company
• US7.6m (pre expenses) raised in June 2005 8
  institutions/high worth individuals

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Private PlacementNovember 2005

• Issued 7,936,000 units at C1.00 per unit
• Unit consists of 1 common share and one share
  purchase warrant
• Warrants exercisable for 2 years at C1.30
• 4 European and North American institutions

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Avnel Gold Mining Limited
TSX AVK AVK.WT
www.avnelgold.com