Avala Resources Ltd.

Avala Resources Ltd.

April 10, 2012 08:00 ET

Avala Resources Provides Update on the Korkan Resource Definition Drilling Program and Continues to Expand Korkan East-Intersects 26m @ 10.01g/t Gold and 90g/t Silver

LONGUEUIL, QUEBEC--(Marketwire - April 10, 2012) - Avala Resources Ltd. (TSX VENTURE:AVZ) (the "Company" or "Avala") is pleased to provide an update on the Korkan target, part of its Timok Gold Project, a new gold discovery in an emerging sediment-hosted gold belt located in Eastern Serbia. The Timok Gold Project comprises several targets, including Bigar Hill, Korkan and Kraku Pestar. Avala controls 100% of this newly identified sediment-hosted gold belt which totals approximately 250 square kilometres.

  • The Korkan resource definition drilling program commenced on January 9, 2012, focussing on establishing continuity of mineralization using a nominal 80 meter by 80 meter grid spacing, together with a subset at a nominal 40 meter by 40 meter grid spacing. The drill holes are located within the Korkan mineralized 'footprint' that was outlined by Avala during the earlier, wide-spaced, 160 meter by 160 meter diamond drilling program, which commenced in November, 2010.
  • Continuing resource definition reverse circulation (RC) drilling, the majority of which has been drilled on a nominal 80 meter by 80 meter grid spacing, at Korkan has returned the following strong to moderate grade gold intercepts (0.4g/t cut-off grade):
Hole ID From (m) To (m) Interval (m) Au (g/t) Gram-meters
KORC036* 213 251 38 1.03 39
KORC053 96 109 13 1.89 25
KORC057 44 112 68 3.15 214
KORC069* 208 245 37 2.59 96
KORC070 228 259 31 1.56 48
KORC078 2 11 9 3.36 30
KORC078 58 75 17 1.25 21
Note: Intersections calculated using 5 meter minimum thickness, 5 meter maximum included waste.
Note: The listing does not include 'twin' RC drill hole intersections of previously drilled diamond drill holes.
* Drill holes terminate in mineralization i.e. mineralization remains open at depth.
  • Diamond drilling on the Korkan East area returned the following wide, moderate to strong, gold intercepts (0.4g/t cut-off grade), from the north-eastern edge of the wide-spaced drilling grid; mineralization remains demonstrably open in this direction:
Hole ID From (m) To (m) Interval (m) Au (g/t) Gram-meters
KODD084 399 414 15 1.46 22
KODD084 421 447 26 10.01 260
KODD092 29 35 6 0.77 5
KODD092 69 86 17 0.85 14
KODD092 105 116 11 0.81 9
KODD092 125 147 22 1.16 26
KODD092 159 182 23 0.83 19
KODD092 188 209 21 0.53 11
KODD092 218 261 43 1.07 46
Note: Intersections calculated using 5 meter minimum thickness, 5 meter maximum included waste.
  • Large mineralized 'footprints' have been defined at Korkan (1,200 meters by 600 meters), Bigar Hill (1,000 meters by 1,000 meters) and Kraku Pestar (600 meters by 300 meters). All three mineralized areas are 'open' in at least one direction.
  • Resource definition drilling, using a nominal 80 meter by 80 meter drill spacing, also continues on the Kraku Pestar target area, using a combination of RC and diamond drilling.
  • A wide-spaced, exploration drilling program, concomitant with the resource definition program, continues to test the prospective 'target stratigraphy' within the Korkan-Bigar trend. The key aim of this aspect of Avala's exploration program is to outline the size of the newly defined sediment-hosted gold system.
  • Avala currently has eight diamond drill rigs and two RC drill rigs operating on the Korkan-Bigar portion of the Timok Gold Project.
  • See Figure 1 for the location of Avala's Timok Gold Project licenses within the mapped sediment-hosted gold belt and the location of Korkan, Bigar Hill and Kraku Pestar.

Resource Definition Drilling (Korkan):

  • Avala commenced RC drilling at Korkan on the 9th January, 2012.
  • The Korkan target is being drilled on a nominal 80 meter by 80 meter grid spacing. A portion of the target area will be drilled on a nominal 40 meter by 40 meter grid spacing to provide geostatistical support for resource estimation purposes. Diamond 'twin' drilling of the RC drill holes will be carried out across the target area at a nominal rate of 15% of total RC drilling.
  • Refer to Table 1 for a summary of intersections for the results of reverse circulation drill holes KORC034 to KORC072, KORC074 and KORC078 together with diamond drill holes KODD078 to KODD085, KODD087 and KODD092, and including all previously reported Korkan drill holes. Figure 2 shows a gram-meter total metal contour plot (intervals greater than 0.4g/t Au x thickness), of all Korkan drilling to date, superimposed on topographic contours. Figure 3 shows a representative cross-section through the Korkan to Korkan East area.
  • The routine reverse circulation-diamond 'twin' drilling program continues to confirm that the majority of mineralized intercepts and hence the deposit style, is dominated by layer-parallel, lithology-controlled gold mineralization and that there can be close spaced variation in gold grade, as is typical for gold deposits.

Korkan East:

  • Recent wide-spaced drilling on the Korkan East area continues to intersect broad intervals of gold mineralization within calcareous sandstone and conglomerate units and also at, or slightly below, the limestone-sediment contact. Additionally, repetitions of the target stratigraphy have been recognized within this area, most likely due to pre-mineral faulting events. This local repetition of stratigraphy has the potential to materially increase the overall volume of the calcareous sandstone and conglomerate units, which are the principal host to gold mineralization within the Timok Gold Project (refer to Figure 3).
  • The strong gold intersection reported in KODD084 also contains high silver grades (26m @ 10.01g/t Au and 90g/t Ag) and is spatially associated with base metal sulfides, most notably galena and sphalerite. An internal interval grades 16m @ 15.39g/t Au and 136g/t Ag. The mineralization style is similar to the majority of intervals reported to date in that the carbonate matrix has been replaced (decarbonatization) by pyrite and other sulfides surrounding the sedimentary quartz grains or pebbles.
  • At present, Avala believes that the Pb-Zn-Ag mineralization may be associated with the nearby Timok Diorite Porphyry Cluster and represents a distal, lower temperature mineralizing event upon which the sediment-hosted gold mineralization has later overprinted.
  • Multiple gold mineralized intercepts per hole are a common feature of the gold mineralization outlined to date in the Korkan target area
  • A major sediment-hosted gold belt bordering the western boundary of the Timok Magmatic Complex, identified by soil and trench samples, extends over 30 kilometers along strike and is up to 8 kilometers wide.
  • Soil sampling has been completed to the south of the currently defined 30 kilometer strike in order to attempt to determine the overall extent of the belt which, based on the extent of mapped 'target stratigraphy', has the potential to be approximately 70 kilometers in length.
  • The geology, geochemistry and available drill intersections suggest a strong similarity to the style of gold mineralization typified by the North Carlin Trend, Nevada, USA.
  • The recognition that the majority of the significant trench and diamond drill intercepts returned to date occur within the same flat lying or shallow dipping sedimentary package has significant implications for the gold potential of the Korkan-Bigar trend and the entire sediment-hosted gold belt.
  • Avala controls 100% of this newly identified sediment-hosted gold belt, which totals approximately 250 square kilometers, and intends to systematically drill test all currently defined priority target areas.
  • Please see the following link to view all Korkan-Bigar and Kraku Pestar drill holes located spatially in three dimensions: http://www.corebox.net/properties/timok-gold-project

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 metre 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 metre 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.

Dr Julian F. H. Barnes, a qualified person under National Instrument 43-101, a Director and the Company's Special Consultant, has supervised the preparation of the technical data in this press release.

Previously released data refers to data included in the "Potoj Cuka Gold Project, Serbia National Instrument 43-101 Technical Report" by Paul Mazzoni dated March 10, 2010 (the "Technical Report"), filed on SEDAR at www.sedar.com. Further information in respect of results, investigations, interpretations, quality assurance and quality control measures, along with geology, mineralogy, sampling, and analytical procedures is included in the Technical Report.

About Avala Resources Ltd.: Avala is a recently-formed company focused on the exploration and development of the Potoj Cuka sediment-hosted gold project and the Timok gold-copper project in Serbia. The common shares of Avala trade on the TSX Venture Exchange under the symbol AVZ.

Avala is well-capitalized, with approximately $25 million in its treasury at March 31, 2011, which it plans to use for the exploration and development of its mineral projects in Serbia. Avala's issued and outstanding share capital totals 214,492,223 common shares, of which approximately 51.4% is held by Dundee Precious Metals Inc. (TSX:DPM).

Cautionary Statement

This press release contains forward-looking information. Although the Company believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. Forward looking information in this news release includes statements regarding the results of the exploration activities and interpretation of such results, the nature of the mineralization of the project and the potential size of the sediment-hosted gold system, the suggested similarity to the style of gold mineralization of the North Carlin Trend project, the completion of a resource estimation, and the timing and location of future work programs. Forward-looking information involves known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Maps and tables are available at the following address: http://media3.marketwire.com/docs/Avala_maps_table.pdf

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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