Avala Resources Ltd.
TSX VENTURE : AVZ

Avala Resources Ltd.

October 16, 2013 08:57 ET

Avala Resources Announces Upgraded Resource Estimates for the Timok Gold Project, Serbia

Total indicated gold resources increased to 2.3 million ounces of gold (46.3 million tonnes at 1.56 Au g/t gold)

LONGUEUIL, QUÉBEC--(Marketwired - Oct. 16, 2013) - Avala Resources Ltd. (TSX VENTURE:AVZ) (the "Company" or "Avala") is pleased to announce updated Canadian National Instrument 43-101 ("NI 43-101") resource estimates for the Bigar Hill and Korkan deposits, part of its Timok Gold Project, a recent gold discovery in an emerging sediment-hosted gold belt located in Eastern Serbia.

  1. HIGHLIGHTS

In 2012 and early 2013, the Company announced initial resource estimates for the Bigar Hill, Korkan and Kraku Pester areas. The combined mineral resources at a cut-off grade of 0.6 Au g/t included 0.27 million ounces in the indicated category (6.32 million tonnes at 1.3 Au g/t) and 2.4 million ounces in the inferred category (48.7 million tonnes at 1.5 Au g/t).

The main objective of the Company's drilling since the announcement of the initial resource estimates was to convert inferred resources to indicated category. This was successfully done based on 75,724 meters of infill drilling, A notional infill drill spacing of 40 meters by 40 meters was used for the drilling program.

Based on a 0.6g/t gold cut off, the Timok Gold Project contains in situ resources of 46.3 million tonnes grading an average of 1.56 g/t gold in the indicated resource category for 2,318,000 ounces of gold and 8.7 million tonnes grading an average of 1.3 g/t gold in the inferred resource category for 360,000 ounces of gold.

As a result of the infill drilling 94% of the Bigar Hill resources are now classified as indicated resources, along with 75% of Korkan and 74% of Kraku Pester.

TIMOK GOLD PROJECT
INDICATED AND INFERRED RESOURCE ESTIMATES
Indicated Inferred
Deposit Cut Off Grade (Au g/t) Million
Tonnes
Au
(g/t)
Million Ounces (Au) Million
Tonnes
Au
(g/t)
Million Ounces (Au)
Bigar Hill 0.6 25.48 1.63 1.34 1.6 1.6 0.08
Korkan 0.6 14.51 1.53 0.72 4.9 1.4 0.21
Kraku Pester 0.6 6.32 1.31 0.27 2.2 1.0 0.07
Total 0.6 46.30 1.56 2.32 8.7 1.3 0.36
Notes: (1) The effective date of the Bigar Hill and Korkan updated mineral resource estimates is 14th October 2013.

(2) The resource estimations have been completed by Chris Arnold MAusIMM CP(Geo) of AMC Consultants Limited (UK) ("AMC").

(3) The gold price used in this estimate was US$1250/oz. Several phases of extensive metallurgical test work have been completed and, based on information to date, along with possible projected throughput rates for the entire Timok Gold Project, typical mining costs and a range of processing costs and indicative processing suitable gold cut off grades are considered to lie in the range of 0.4g/t to 0.8g/t.

(4) Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

(5) The quantity and grade of reported indicated and inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these indicated and inferred resources as measured mineral resources.

(6) Totals and average grades are subject to rounding to the appropriate precision.

A summary of the mineral resource estimates using various cut offs is presented below:

TIMOK GOLD PROJECT
INDICATED AND INFERRED RESOURCE ESTIMATES (1)
Combined Mineralized Zones
In Situ Resources
Local Multiple Indicator Kriging Estimate
5m x 5m x 5m Selective Mining Unit
INDICATED RESOURCES
Bigar Hill Korkan Kraku Pester Total
Cut Off
(Au g/t)
Million
Tonnes
Au
(g/t)
Au
(Moz)
Million
Tonnes
Au
(g/t)
Au
(Moz)
Million
Tonnes
Au
(g/t)
Au
(Moz)
Million
Tonnes
Au
(g/t)
Au
(Moz)
0.2 53.07 0.97 1.65 39.12 0.79 0.99 11.37 0.91 0.33 103.57 0.89 2.97
0.4 35.04 1.32 1.49 21.91 1.18 0.83 8.93 1.07 0.31 65.87 1.24 2.63
0.6 25.48 1.63 1.34 14.51 1.53 0.72 6.32 1.31 0.27 46.30 1.56 2.32
0.8 19.77 1.90 1.21 10.41 1.87 0.62 4.63 1.54 0.23 34.81 1.84 2.06
1.0 15.90 2.15 1.10 8.11 2.14 0.56 3.62 1.72 0.20 27.63 2.09 1.86
INFERRED RESOURCES
Bigar Hill Korkan Kraku Pester Total
Cut Off
(Au g/t)
Million
Tonnes
Au
(g/t)
Au
(Moz)
Million
Tonnes
Au
(g/t)
Au
(Moz)
Million
Tonnes
Au
(g/t)
Au
(Moz)
Million
Tonnes
Au
(g/t)
Au
(Moz)
0.2 6.2 0.6 0.1 17.5 0.6 0.4 8.1 0.5 0.1 31.8 0.6 0.6
0.4 2.8 1.1 0.1 8.5 1.0 0.3 4.4 0.7 0.1 15.7 0.9 0.5
0.6 1.6 1.6 0.1 4.9 1.4 0.2 2.2 1.0 0.1 8.7 1.3 0.4
0.8 1.1 2.0 0.1 3.0 1.8 0.2 1.3 1.2 0.0 5.4 1.7 0.3
1.0 0.8 2.4 0.1 2.2 2.1 0.1 0.7 1.4 0.0 3.7 2.0 0.2

(1) See notes under the table above.

It should be noted that the lower, eastern sector of Korkan, termed Korkan East, has been excluded from the resource estimates. Korkan East, in part, comprises a polymetallic style of mineralization, containing elevated levels of gold, silver, lead, zinc and arsenic. All drill holes within the Korkan East volume have been re-assayed for silver, lead, zinc, arsenic and sulphur and the sector will be the subject of a separate resource estimate, currently being prepared by AMC. A press release detailing drilling results from the Korkan East sector is in preparation. Initial phases of metallurgical testwork on Korkan East have also been carried out.

The Bigar Hill component of the combined resource estimate includes a contribution for a newly discovered, small fault-bounded block, termed Bigar North West, which is located approximately 500 meters from the northern boundary of the Bigar Hill mineralization and which has been classified as an inferred resource.

  1. ADDITIONAL INFORMATION

Introduction

  • Avala controls 100% of this recently identified sediment-hosted gold belt through a license holding that totals 1159 square kilometres.

  • The locations of Bigar Hill, Korkan and Kraku Pester are displayed in Figure 1.

  • Details of the Kraku Pester drilling programs and resource estimate were reported on January 14, 2013 and are not repeated here for brevity.

Drilling and Sampling

  • The Bigar Hill infill drilling program comprised 251 drill holes (19 diamond drill holes, "DD" and 232 reverse circulation drill holes, "RC", including 24 RC holes with diamond drill core 'tails', "DT"). Details of the drilling and sampling program and a comparison with the initial phases of drilling at Bigar Hill are summarised in the table below. Figure 2 shows the location and type of infill drilling along with a surface projection of resource bocks above 0.6 g/t Au, subdivided by resource category.

  • For the Korkan infill drilling program a total of 135 holes were drilled, dominated by RC drilling and details are summarized in the table below. Figure 3 displays the location and type of infill drilling for Korkan, along with a plan projection of categorized resources above 0.6g/t Au.

  • The location of the Korkan East resource blocks that have been excluded from the current resource reporting are shown in Figures 3 and 4.

  • The drill plan and a surface projection of resource blocks greater than 0.6g/t for Kraku Pester are displayed in Figure 5.

  • The Bigar Hill infill drilling program comprised 54,824 meters whilst the Korkan infill drilling program totalled 20,890 meters. Over 75,629 primary assays were completed during the Korkan and Bigar Hill infill drilling programs.

  • In addition to the collection and processing of primary assays, a very large amount of check sampling and assaying has been completed, as part of Avala's standard QAQC procedures.

  • Block model preparation and resource estimation has been completed using Datamine and Isatis. One-meter composites (the standard Avala sampling unit) were used to define geological boundaries and mineralized wireframes, whilst three-meter down hole composites were used for statistical analysis, variography and resource estimation.

BIGAR HILL DRILLING PROGRAMS
Original Drilling Programs Infill Drilling Program Total Drilling Program
Item DD DT RC Total DD DT RC Total DD DT RC Total
HOLES 68 6 125 199 19 24 208 251 87 30 333 450
METERS DRILLED 17268 609 26658 44895 7382 2814 44629 54824 25010 3423 71287 99720
SAMPLES 17692 605 26657 44954 7409 2702 44628 54739 25101 3307 71285 99693
AVERAGE RECOVERY 98 % 98 % 91 % 99 % 99 % 93 % 98 % 99 % 92 %
PRIMARY ASSAYS (Au) 17692 605 26657 44954 7409 2702 44628 54739 25101 3307 71285 99693
BULK DENSITIES 3703 55 3758 1230 589 1819 4933 644 5577
TWIN DRILL PAIRS 17 8 25
TWIN DRILL METERS 4210 2314 6523
KORKAN DRILLING PROGRAMS
Original Drilling Programs Infill Drilling Program Total Drilling Program
Item DD DT RC Total DD DT RC Total DD DT RC Total
HOLES 145 10 161 316 1 134 135 146 10 295 451
METERS DRILLED 46434 1397 29481 77312 567 20323 20890 47000 1397 49804 98201
SAMPLES 46358 1396 29481 77235 572 20323 20895 46930 1396 49804 98130
AVERAGE RECOVERY 97 % 98 % 92 % 92 % 90 % 97 % 98 % 91 %
PRIMARY ASSAYS (Au) 46358 1396 29481 77235 572 20323 20895 46930 1396 48904 98130
BULK DENSITIES 9004 230 9234 92 92 9096 230 9326
TWIN DRILL PAIRS 18 18
TWIN DRILL METERS 4222 4222

Density Measurements

  • Density measurements are routinely taken every three meters down hole from diamond drill core. The bulk density of the core billets is measured at the SGS managed laboratory at Bor using the industry standard wax-seal immersion method.

  • A very large number of density measurements have been collected at Bigar Hill (5,577 measurements) and Korkan (9,326 measurements), enabling the density to be estimated into the block models.

  • An inverse distance squared weighting algorithm was used for density estimation during block modelling.

Resource estimation

  • Resource estimation has been completed using the geostatistical technique, Local Multiple Indicator Kriging ("Local MIK"). Local MIK is a form of Multiple Indicator Kriging ("MIK") where the grades are 'mapped' directly into selective mining unit ("SMU") sized blocks from a MIK panel estimate using an intermediate stage incorporating Ordinary Kriging ("OK") into SMU size blocks (5m x 5m x 5m).

  • At Bigar Hill a total of 17 indicator cut offs were used to define the metal distribution within the model cells. At Korkan some 19 indicator cut offs were used for the upper mineralised zone (MSSS) while 17 indicator cut offs were used for the other defined mineralized zones.

  • At Bigar Hill, detailed variography has been carried out on six of the 17 indicator cut offs, spread through the grade distribution, while at Korkan five indicators were chosen for detailed variographic analysis and modelling.

  • Statistical analysis of the composite grade distribution confirmed that, for the great majority of mineralization at Bigar Hill and Korkan, 'outlier' samples were absent and no upper cut was applied prior to estimation by Local MIK. At Bigar Hill, an upper cut of 8 g/t was used for mineralization within the upper volcanic unit (MSVO).

  • The mineral resource was estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council. The in-situ resource estimates are within the defined mineralized wireframes and are reported at a range of lower cut off grades.

  • Based on the metallurgical information available to date, along with possible projected throughput rates, a range of processing costs and recoveries and a gold price of US$1250/oz., appropriate cut off grades are considered to be in the range 0.4g/t to 0.8g/t.

Metallurgical Testwork

  • Comprehensive metallurgical test work on the Timok Gold Project lithologies is being finalized and will be reported on when all results are to hand and have been compiled.

Please see the following link to view all Korkan, Bigar Hill and Kraku Pester drill holes located spatially in three dimensions: http://www.corebox.net/properties/timok-gold-project

  1. SAMPLING AND ANALYSIS

The majority of soil samples have been assayed at the ALS Chemex laboratory, Perth, Australia. More recent programs have been assayed at the SGS managed laboratory at Chelopech in Bulgaria using a combination of ICP-OES and ICP-MS; whereas gold has been assayed by low level detection fire assay method with an AAS finish. The Company has established a laboratory facility at Bor, Eastern Serbia which is independently managed by SGS. Trench samples were prepared at the laboratory facility at Bor and the samples have been assayed at the SGS managed laboratory at Chelopech in Bulgaria or the laboratory facility at Bor. Diamond drill core has been prepared at the laboratory facility at Bor and assayed at either the SGS managed laboratory at Chelopech in Bulgaria or the assay laboratory at Bor. A one meter sampling interval has been used where possible for the Timok Gold Project diamond drilling program. Half core is routinely submitted to the laboratory for analysis. Reverse circulation drill samples have been prepared at the laboratory facility at Bor and assayed at the laboratory at Bor. A one meter sampling interval has been used for the Timok Gold Project reverse circulation drilling program. Following Avala standard quality assurance procedures, a full suite of field and laboratory duplicates and replicates along with internationally accredited standards and blanks, have been submitted with each batch of samples.

Trench sampling was carried out as channels in the wall just above the trench floor on 2m intervals. Except where extensive soil cover is encountered, trenches are sampled in their entirety. The samples were routinely weighed prior to final bagging to maintain an even sample size and to avoid sampling bias in harder rock types. An average channel sample weight was maintained at 3kg/m, which produces a consistent sample weight approximating half HQ core samples. Field duplicate samples were taken every 20 samples and known standards were inserted into the sample stream after every 20th sample. A geological and structural log was completed as for diamond drilling. All data collected in the field is routinely entered into geology and structural geology spread sheets using Field Marshal software for subsequent inclusion in an acQuire database and validation.

  1. QUALIFIED PERSONS

The Bigar Hill and Korkan updated resource estimates were undertaken by independent qualified person Chris Arnold MAusIMM CP(Geo) of AMC. Mr. Arnold has reviewed and approved the contents of this press release insofar as mineral resource estimates are concerned.

AMC is completing a technical report for the mineral resource estimate in compliance with NI 43-101 to be filed on SEDAR within 45 days of this press release.

The other technical information contained in this press release was prepared and approved by Dr Julian F. H. Barnes, FAusIMM, MAIG, a director of the Company and special consultant. Dr. Barnes is a 'qualified person' within the meaning of that term under NI 43-101.

Figures 1 to 5 are available at this address: http://media3.marketwire.com/docs/904692e.pdf.

About Avala Resources Ltd.: Avala Resources is a mineral exploration company focused on the exploration and development of the Timok Gold Project in Eastern Serbia. The Timok Gold Project comprises several targets, including the Korkan, Bigar Hill and Kraku Pester deposits. Avala controls 100% of this recently identified sediment-hosted gold belt which totals approximately 250 square kilometers. The common shares of Avala trade on the TSX Venture Exchange under the symbol AVZ.

Avala had approximately $4.5 million in its treasury at September 30, 2013. Avala's issued and outstanding share capital totals 254,492,223 common shares, of which approximately 53.1% is held by Dundee Precious Metals Inc. (TSX:DPM).

Cautionary Statement Regarding Forward-Looking Information

This press release contains 'forward-looking information' within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "believe", "plan", "expect", "intend", "estimate", "project", "schedule", "may", "will", "could", "might", "should" or variations of such words or similar words or expressions. Forward looking information in this press release includes information about mineral resource estimates, the timing of announcement of results of additional drilling and metallurgical testwork, the timing and location of future work programs, the results and interpretation of studies and exploration activities, the nature of the mineralization of the project, and the potential for further discoveries. Since forward-looking information are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for gold; legislative, environmental and other regulatory, political and competitive developments; operational difficulties encountered in connection with the activities of the Company; the Company's financial condition, and other matters discussed in this news release. This list is not exhaustive of the factors that may affect any of the Company's forward-looking information. These and other factors made in public disclosures and filings by the Company should be considered carefully and readers should not place undue reliance on the Company's forward-looking information. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.

Mineral resources are not mineral reserves and do not have demonstrated economic viability. "Inferred Resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. Investors are cautioned not to assume that all or any part of an inferred mineral resource reported in this news release will ever be upgraded to a higher category or to reserves. U.S. persons are advised that while mineral resources are recognized under Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. persons are also cautioned not to assume that all or any part of an inferred mineral resource is economically or legally mineable.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

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