November 15, 2011 / 12:33 PM / in 7 years

UPDATE 3-Avion Gold cuts 2011 output view again, shares fall

* Q3 EPS $0.02 vs $0.04 year ago

* Q3 revenue up 16 pct

* Sees FY11 production of 92,000-95,000 ounces of gold

* Shares fall 11 percent (Updates share movement)

Nov 15 (Reuters) - Avion Gold Corp’s third-quarter profit halved partly on lower ore grades at its mine in Mali and some tax provisions, and the Canadian gold miner cut its full-year production forecast for the second time in two months, sending its shares down 11 percent.

The West Africa-focused company, which holds 80 percent of the Tabakoto and Segala gold projects in Mali, said the ore grade at its Dioulafoundou open pit mine was lower than estimated in a geologic model.

Mill recovery fell to 88 percent in October from 96 percent, the company said in a statement.

The company had to process low-grade ore as equipment arrived late due to the closure of the main shipping port in the Ivory Coast and the diversion of shipments to the port of Dakar in Senegal.

For 2011, the company expects to produce 92,000-95,000 ounces of gold, down from its prior view of 95,000-100,000 ounces.

For July-September, Avion Gold net income fell to $7.2 million, or 2 cents a share, from $14.4 million, or 4 cents a share, a year ago.

Revenue rose 16 percent to $36.9 million, driven by higher gold prices.

Gold prices averaged more than $1,700 an ounce in the third quarter, up about 35 percent from a year earlier.

The company realized cash cost of $806 per ounce, compared with $498 per ounce last year.

Avion’s mining and processing costs rose 83 percent to $21.5 million, including $4.2 million as provisions for payroll taxes and other liabilities.

It sold 22,000 ounces of gold in the quarter, down from 25,700 ounces sold in the year-ago quarter.

Avion Gold shares, which have gained 64 percent of their value in the last six months, fell 25 Canadian cents to C$1.93 on Tuesday morning on the Toronto Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Don Sebastian)

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