Avala and Dunav Announce Agreement to Combine the Companies

Avala Resources Ltd. (TSX VENTURE:AVZ) ("Avala") and Dunav Resources Ltd. (TSX
VENTURE:DNV) ("Dunav") are pleased to announce that they have reached an
agreement to combine the two companies. Under the terms of a binding letter
agreement (the "Agreement"), Avala will issue to Dunav shareholders 1.0457
common shares for every one (1) outstanding common share of Dunav (the "Exchange
Ratio") held. All outstanding stock options and warrants of Dunav will be
exchanged for options and warrants of Avala in an amount and at exercise prices
adjusted in accordance with the Exchange Ratio. This will result in Avala
issuing 183,331,540 new common shares, 63,768,411 warrants and 8,292,401 stock
options, for a total of 437,823,763 common shares outstanding and 129,165,812
shares reserved for issuance following completion of the business combination.
Completion of the business combination will be subject to, among other things,
regulatory approval and all required shareholder and court approvals. The
Exchange Ratio was established in order to reflect a 22% premium for Dunav's
shares based on a 20 day volume weighted average share prices of Avala and
Dunav's shares on the TSX Venture Exchange ("TSXV"), as at July 24, 2014.


It is anticipated that the business combination will be completed by way of plan
of arrangement under the Business Corporations Act (British Columbia).
Completion of the business combination is subject to certain conditions
including but not limited to the following: (a) completion of satisfactory due
diligence and definitive agreement by August 15, 2014; (b) receipt of all
necessary consents, waivers, permits, exemptions, orders and approvals,
including court approval of the plan of arrangement and the approval of the
TSXV, as applicable; (c) receipt of disinterested shareholder approval of the
business combination by the Avala and Dunav shareholders; and (d) receipt by
Avala of sufficient funds to continue and maintain its current operations in
good standing until completion of the business combination. 


In the event a superior offer is made for either Dunav or Avala that is accepted
and completed, Dunav or Avala (as the case may be), will be required to pay a
break fee equal to 3% of the value of the consideration that was to have been
paid to that company's shareholders pursuant to the Agreement.


Under the policies of the TSXV, Avala and Dunav are non arm's length parties to
one another by virtue of the fact that they have four common directors and
overlapping management. Each company has the same controlling shareholder,
Dundee Precious Metals Inc. ("DPM"), which owns 53.1% of Avala's outstanding
common shares and 45.5% of Dunav's outstanding common shares, resulting in the
transaction being a business combination with a related party under Multilateral
Instrument 61-101 ("MI 61-101") and Policy 5.9 of the TSXV Corporate Finance
Manual. According to MI 61-101, such a business combination requires a formal
valuation and minority shareholder approval, unless exempted. An exemption from
the formal valuation requirement is available as Avala and Dunav's shares are
not listed on any specified market (as that term is used in MI 61-101). Chantal
Gosselin, chair of the special committee of independent directors established by
Avala, and Elaine Bennett, chair of the special committee of independent
directors established by Dunav, explained that each special committee has
undertaken a comprehensive review of the business combination, with advice from
independent financial advisors and legal counsel. The special committees were
actively involved in the negotiation of the terms of the proposed business
combination. Each special committee has received a presentation from its
respective financial advisor with respect to the fairness of the transaction to
their respective shareholders. After careful consideration, each special
committee has unanimously approved the business combination and recommended the
approval of the business combination to their respective board of directors, who
in turn approved the Agreement. 


Avala's special committee retained Primary Capital Inc. as financial advisor and
Koffman Kalef LLP as legal advisor. Dunav's special committee retained Paradigm
Capital Inc. as financial advisor and Lawson Lundell LLP as legal advisor. 


The shareholder meetings of both companies are scheduled to be held on September
30, 2014. Subject to obtaining all required approvals and the satisfaction or
waiver of other closing conditions, it is anticipated that the business
combination will be completed early in October 2014. On completion of the
business combination, the board of directors of Avala will consist of six
directors from Avala and two directors from Dunav. It is expected that the
combination of Avala and Dunav will bring a number of benefits, including the
merger of both companies' exploration activities in Serbia, and will allow the
combined company to realize savings in management and administrative costs.


Further details regarding the business combination will be provided in a special
management information circular of each company to be filed with regulatory
authorities and mailed to shareholders.


Avala to issue US$1M Convertible Debentures

Avala and DPM have entered into a letter of intent setting out the terms under
which DPM intends to purchase up to US$1 Million of senior secured convertible
debentures of Avala that can be drawn in tranches of US$250,000 (the
"Debentures"), for the purpose of providing working capital to Avala. The
Debentures will mature the earlier of (i) 120 days from issuance and (ii) 5 days
from the completion of the business combination with Dunav. The Debentures will
bear interest at the rate of 12% per annum on the first US$500,000, 15% per
annum on the next US$250,000, and 18% per annum on the last US$250,000 tranche,
with the last drawdown requiring DPM's pre-approval. DPM will have the option to
convert all or part of the principal amount of the Debentures into common shares
of Avala at any time up to 180 days after maturity of the Debentures at a
pre-consolidation (see below) conversion price of $0.04 per common share. The
Debentures will be issued in reliance upon prospectus and private placement
exemptions.


The issuance of the Debentures to DPM is a related party transaction pursuant to
MI 61-101. Avala is relying on the exemption from the formal valuation and
minority shareholder approval requirements contained in sections 5.5 (g) and
5.7(1)(e) of MI 61-101. The independent directors of Avala, Chantal Gosselin and
John Wakeford, have recommended that the board of directors approve the issuance
of the Debentures. The issuance of the Debentures is subject to a number of
conditions, including but not limited to TSXV approval and execution of
debenture agreements. 


Avala proposed share consolidation

Whether the business combination is completed or not, Avala intends to
consolidate, by the end of October 2014, its common shares on the basis of one
(1) post-consolidation common share for up to every ten (10) pre-consolidation
common shares to provide Avala with greater flexibility in pursuing its plans to
advance its mineral exploration projects, including its ability to obtain
additional financing and potentially acquire new mineral projects.


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, Kraku Pester, and Korkan East deposits. The common shares of Avala
trade on the TSXV under the symbol AVZ. Additional information about the Avala
is available on SEDAR at www.sedar.com and at www.avalaresources.com.


About Dunav Resources Ltd.: Dunav Resources is a mineral exploration company
focused on the acquisition, exploration and development of mineral properties in
Serbia. Dunav's main projects are the Tulare Copper-Gold Porphyry Project which
includes the Kiseljak and Yellow Creek deposits, and the Dergmen Gold-Copper
Porphyry Project. The common shares of Dunav trade on the TSXV under the symbol
DNV. Additional information about the Dunav is available on SEDAR at
www.sedar.com and at www.dunavresources.com. 


Cautionary Statement Regarding Forward-Looking Information 

This press release contains 'forward-looking information' within the meaning of
Canadian securities legislation. Forward looking information in this press
release includes information about the completion and timing of the proposed
business combination between Avala and Dunav, the proposed $1 million
convertible debentures and the proposed share consolidation. These
forward-looking statements are subject to a variety of risks and uncertainties
which could cause actual events or results to differ materially from those
anticipated, including, the contemplated business combination not being
completed as a result of a number of factors including, without limitation, the
shareholders of Avala or Dunav not approving the transaction, or required
regulatory or court approvals not being obtained, the possible failure to
realize anticipated synergies, expense reductions or other benefits of the
transaction; the financing not being completed as a result of required
regulatory approvals not being obtained; the share consolidation not being
completed or the benefits of the consolidation not being obtained; and other
risks and uncertainties. Readers should not place undue reliance on the
forward-looking information contained in this news release. Neither Avala nor
Dunav undertakes to update any forward-looking information, except as required
by applicable securities laws. 


Investors are cautioned that, except as disclosed in the management information
circular to be prepared in connection with the business combination, any
information released or received with respect to the business combination may
not be accurate or complete and should not be relied upon. Trading in the
securities of Avala and Dunav should be considered highly speculative. 


The TSXV has in no way passed upon the merits of the proposed transactions and
has neither approved nor disapproved the contents of this press release.


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


FOR FURTHER INFORMATION PLEASE CONTACT: 
Avala Resources Ltd.
David Fennell, Executive Chairman
+1.450.640.0810
[e-mail]
www.avalaresources.com


Dunav Resources Ltd.
James Crombie, President and Chief Executive Officer
+1.450.640.3868
[e-mail]
www.dunavresources.com