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Avala Resources Ltd. (TSX VENTURE:AVZ) (the "Company" or "Avala") is pleased to present an update on progress and drill results from the Korkan-Bigar trend, part of the sediment-hosted gold belt within the Cretaceous magmatic arc bordering the Timok Magmatic Complex ("TMC") in Eastern Serbia. "With these initial reverse circulation infill drilling results we are starting to establish continuity of stratabound mineralization at Bigar Hill, which is an important milestone for the sediment-hosted gold project", said James Crombie, President and CEO of Avala. "In addition, our ongoing wide-spaced, exploration diamond drilling program continues to grow the overall mineralized footprint at the Korkan target area together with advancing our other recently discovered target areas which are located in close proximity to the resource definition drilling areas." 1. HIGHLIGHTS -- Resource definition drilling continues with a Reverse Circulation (RC) drill rig (GEMEX RC-500) on the Korkan-Bigar trend, initially drilling the Bigar Hill target area. -- The resource definition program is focused on establishing continuity of mineralization, with a nominal 80 meter by 80 meter grid spacing within the mineralized 'footprints' which have been outlined by Avala during the earlier, wide-spaced, 160 meter by 160 meter diamond drilling programs, which started in August, 2010. -- Resource definition RC drilling at Bigar Hill returned the following strong to moderate gold intercepts (0.4g/t cut-off grade): ---------------------------------------------------------------------------- Hole ID From (m) To (m) Interval (m) Au (g/t) Gram-meters ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- BHRC005 69 106 37 4.50 167 BHRC006 3 24 21 2.60 55 BHRC009 10 48 38 1.18 45 BHRC012 23 64 41 1.15 47 BHRC013 29 77 48 1.56 75 BHRC020 111 131 20 2.19 44 BHRC023 86 116 30 3.61 108 ---------------------------------------------------------------------------- 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. -- The reverse circulation-diamond 'twin' drill holes drilled to date have confirmed that the majority of mineralized intercepts and hence the deposit style, is dominated by layer-parallel, lithology-controlled gold mineralization at Bigar Hill. -- There is evidence of steeper mineralized structures in addition to the dominant, stratigraphically controlled, gold mineralization. These intersections represent a 'bonus' and are likely to be intersected in greater numbers as the infill drilling program progresses. -- Wide-spaced 'step out' drilling (nominal 160 meter by 160 meter) on the Korkan-Bigar trend continues to intersect gold mineralization within the target stratigraphy, a sequence of strongly altered and decarbonatized conglomerates and sandstones with interbedded fine grained sandstone and clay-rich siltstones, marls, andesitic volcanics and derivative clastic rocks. -- Drilling on the Korkan target area returned the following strong gold intercept (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 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- KODD058 210 222 12 5.43 65 ---------------------------------------------------------------------------- Note: 5 meter minimum thickness, 5 meter maximum included waste. -- Exploration drilling continues to test new target areas, located in close proximity to the Korkan and Bigar Hill mineralized 'footprints'. -- Exploration drilling on the Bigar East target area, located approximately 800 meters east-southeast of the Bigar Hill zone returned the following gold intercepts (0.4g/t cut-off grade): ---------------------------------------------------------------------------- Hole ID From (m) To (m) Interval (m) Au (g/t) Gram-meters ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- BIDD019 118.8 134 15.2 3.01 46 BIDD022 72 80 8 1.76 14 ---------------------------------------------------------------------------- Note: 5 meter minimum thickness, 5 meter maximum included waste. -- Exploration drilling on the Rapture Fault Zone, located approximately 700 meters southwest of the Bigar Hill zone returned the following broad, low grade, gold intercepts (0.4g/t cut-off grade): ---------------------------------------------------------------------------- Hole ID From (m) To (m) Interval (m) Au (g/t) Gram-meters ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- BIDD024 6.7 32 25.3 0.43 11 42 63 21 0.51 11 111 116 5 0.66 3 ---------------------------------------------------------------------------- Note: 5 meter minimum thickness, 5 meter maximum included waste. -- To date, Avala has outlined gold mineralization at Korkan over an area of approximately 1,200 meters by 600 meters surrounding the original discovery hole (open to the east and north-east) and an area of 1,000 meters by 1,000 meters on the Bigar Hill target area (open in all directions). Kraku Pestar has been traced over 600 meters by 300 meters and is open to the north and south. -- Additional target areas have been identified within 3 kilometres of the core Korkan-Bigar Hill area, in similar target stratigraphy. -- Avala intends to continue the wide-spaced drilling program, in conjunction with the recently commenced resource definition program, in order to test the prospective 'target stratigraphy' within the Korkan- Bigar trend, to effectively outline the size of the newly defined sediment-hosted gold system. -- The combined Korkan-Bigar trend is over 10 kilometers long and 2.5 kilometers wide and represents only part of the northern portion of the sediment-hosted gold belt. -- Avala currently has seven diamond drill rigs and one RC drill rig operating on the sediment-hosted gold belt. One diamond drill rig has been allocated to an area in the southern portion of the sediment-hosted gold belt, on the Umka-Strnjak trend, where scout drill holes are being drilled on nominal 320 meter by 320 meter centers within the target stratigraphy. The remainder of the drill rigs are operating on the Korkan-Bigar trend. 2. GEOLOGY AND MINERALIZATION STYLE -- Sediment-hosted gold, located along the western margin of the Timok Magmatic Complex, represents a previously unrecognized style of gold mineralization within the Timok region. -- Within the Korkan-Bigar trend, stratabound, fault-controlled breccia together with minor karst-infill breccia represent the styles of sediment-hosted gold mineralization recognized to date. -- Gold mineralization appears to be associated with fine-grained pyrite (sulfidation reaction) and a number of alteration styles including kaolinitization, decarbonatization of calcareous sedimentary rock adjacent to the gold mineralization and occasionally silicification. -- Gold mineralization is hosted within a favourable sedimentary package - the 'target stratigraphy' - which is underlain by Jurassic and Lower Cretaceous limestones and consists predominantly of calcareous sandstones and conglomerates which include an interbedded fine grained sandstone and clay-rich siltstone unit. -- The upper portion of the target stratigraphy consists of 'red' sandstones and volcanic-lithic clastic sediments, which are in turn, overlain by calcareous marls, andesitic volcanic and volcaniclastic rocks, representing the youngest portion of the target stratigraphy. -- To date, gold mineralized intervals have been returned from all portions of the target stratigraphy, excluding, to a certain extent, the marl unit and the interbedded fine grained sandstone and clay-rich siltstone unit which have been only weakly mineralized; Avala believes that these units may be locally acting as an aquitard, or capping unit, to hydrothermal fluids. -- In general, the target stratigraphy within the Korkan-Bigar trend appears to be gently dipping towards the east and may have been gently folded with a northwest axial plane. -- Figure 1 shows the location of the Korkan-Bigar trend and the Kraku Pestar target area within the greater sediment-hosted gold belt, defined in this image by mapped 'target stratigraphy' and anomalous gold soil geochemistry, together with their respective total metal contour plots superimposed. The significant potential of the belt can be clearly seen when the surface area of the mineralized 'footprints' of the currently drilled target areas within the Korkan-Bigar trend are compared to the overall extent of the presently defined gold soil anomalies. 3. DRILLING AT KORKAN-BIGAR -- Resource Definition Drilling: Avala commenced RC drilling on a nominal 80 meter by 80 meter grid spacing at Bigar Hill on the 18th August, 2011. Drilling will continue at Bigar Hill for the remainder of 2011. A second RC drill rig is expected to be operational in January, 2012 and will commence on the Korkan and Kraku Pestar target areas. Additionally, selected locations within the target areas will be drilled to a nominal 40 meter by 40 meter grid spacing to provide geostatistical support and diamond 'twin' drilling of the RC drill holes will be carried out across the target areas at a nominal rate of 15% of total RC drilling. -- Bigar Hill: Avala is continuing the 'step out' diamond drilling program at the Bigar Hill target area to the immediate east from current resource definition drilling, on a nominal 160 meter by 160 meter spacing. See Table 1 for a summary of all intersections at various cut- off grades for the results of reverse circulation drill holes BHRC001 to BHRC023 (excluding BHRC022) and diamond drill holes BHDD035 to BHDD039. Figure 2 shows a gram-meter (intervals greater than 0.4g/t Au x thickness), total metal contour plot of all Bigar Hill drilling to date superimposed on topography. Figure 3 shows a representative cross- section through Bigar Hill including recently completed infill RC drill holes. -- Following Avala standard quality assurance procedures, a number of RC drill holes have 'twinned' previously drilled diamond drill holes at Bigar Hill. Total intersection lengths together with the weighted mean gold grades for the first five 'twin' drill holes are outlined in Table 5: Table 5: Comparative drill hole intersections for RC 'twins' of diamond drill holes at Bigar Hill. ---------------------------------------------------------------------------- Weighted Weighted Total Mean Grade Total Mean Grade Hole ID Length (Au g/t) Hole ID Length (Au g/t) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- BHRC015 57 1.92 BHDD034 60 2.08 BHRC016 61 0.54 BHDD026 22 0.59 BHRC017 29 1.30 BHDD020 33 2.04 BHRC018 73 1.29 BHDD004 72 0.81 BHRC019 67 1.16 BHDD029 65 2.56 ---------------------------------------------------------------------------- Note: Intersection statistics refer to the total intersection length within the drill hole together with the weighted mean grade and can be found in Table 1; 0.4g/t Au cut-off grade, 5 meter minimum thickness, 5 meter maximum included waste. -- The reverse circulation-diamond 'twin' drill holes drilled to date have confirmed that the majority of mineralized intercepts and hence the deposit style, is dominated by layer-parallel, lithology-controlled gold mineralization at Bigar Hill. -- There is evidence of steeper mineralized structures in addition to the dominant, stratigraphically controlled, gold mineralization. These intersections represent a 'bonus' and are likely to be intersected in greater numbers as the infill drilling program progresses. -- The reverse circulation-diamond 'twin' drill holes suggest that there can be close spaced variation in gold grade, as is typical for gold deposits. -- When the current RC drilling data is compared with the diamond drill holes that have intersected the same volume of rock, it is clear that both sample populations are identical and RC drilling is a valid infill drilling method, producing the same results as the equivalent diamond drilling. Following Avala standard quality assurance procedures, all RC sampling is carried out in 'dry' sample conditions. -- Similar proportions of samples above cut-off are reported for both the RC and diamond drilling data sets. See Figure 6 for a log probability plot (0.4g/t cut-off grade) of RC and diamond drilling to date, which shows the identical populations. -- Strong gold mineralization is hosted within polymict conglomerate and sandstone intervals which have been strongly decarbonatized with intense, sooty, fine grained pyrite matrix infill. To date gold mineralization within the footwall Jurassic massive limestone of the Korkan-Bigar trend has been of an overall low to moderate tenor and is generally associated with brecciation, either karst or brittle deformation (excluding the Bigar East target area where strong gold mineralization is associated with brittle deformation within limestones). -- Korkan: Additional drilling, generally peripheral in nature, has been completed within the Korkan target area and results have been returned for the following four drill holes: KODD055 to KODD058. Recent drilling within the north-eastern portion of the Korkan mineralized 'footprint' has outlined strong gold mineralization of the fault-controlled breccia style (equivalent to KODD001) in KODD058 (12m @ 5.43g/t Au (from 210m)), which is also associated with stibnite and realgar mineralization, in addition to the more usual, intense, sooty, fine grained pyrite mineralization. -- The north-east portion of the Korkan target area remains demonstrably open and additional diamond drilling is ongoing in this area. It is important to note that this part of the Korkan target area is overlain by andesitic volcanics and marls, which represent the upper (youngest) portion of the target stratigraphy and are generally unmineralized and do not generate a gold anomaly in soil sampling. Thus this portion of the Korkan target area is 'blind'. See Table 2 & Figure 4. -- Bigar East: Initial wide-spaced drilling (nominal 320 meter by 160 meter) continues to target the Jurassic limestone/'target stratigraphy' contact area which appears to be a faulted contact which dips steeply (approx. 70 degrees ) towards the east and strikes north; it is defined by a moderate gold soil anomaly and variously gold anomalous trenches. Recent drilling continues to intersect a previously unrecognized style of mineralization to date; fault-controlled breccia mineralization within limestone located at a depth below the limestone/'target stratigraphy' contact. -- Additionally, intersections to date tend to suggest that there may be a series of sub-parallel structures within this area. Avala will continue to drill test the Bigar East target area northwards towards the Bigar Hill target area. See Figure 5. -- Rapture Fault Zone: Initial wide-spaced drilling (nominal 160 meter by 160 meter) continues to target the meta-sediment (phyllite)/Jurassic limestone contact area which appears to be a faulted contact dipping steeply (approx. 70 degrees ) towards the east and strikes north- northwest and is defined by a strong gold-arsenic-thallium soil anomaly (greater than 0.1g/t Au), together with moderately gold anomalous trenches. -- Avala is targeting an approximately 1,000 meter long portion of the Rapture Fault Zone, which may contain gold mineralization within a 50-80 meter wide corridor. Mineralization is associated with breccia within the fault zone and stratabound mineralization within the footwall meta- sediments. See Figure 5. -- See Tables 4 & 5 for a summary of all intersections in diamond drill holes BIDD014 to BIDD026 (excluding BIDD025) from the Bigar East and the Rapture Fault Zone areas, at various cut-off grades. -- Multiple gold mineralized intercepts per hole are a common feature of the gold mineralization outlined to date in the Korkan, Bigar Hill, Kraku Pestar and Rapture Fault Zone target areas. 4. DISCUSSION -- A major sediment-hosted gold belt bordering the western boundary of the Timok Magmatic Complex, identified by soil and trench samples, extends over 20 kilometers along strike and is up to 8 kilometers wide. Soil sampling is being completed to the north and south of the currently defined 20 kilometer strike in order to attempt to determine the overall extent of the sediment-hosted gold 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. -- Exploration drill testing within the Korkan-Bigar trend will continue with wide spaced (nominal 160 meter by 160 meter), exploration diamond drill holes, in conjunction with the ongoing resource definition drilling program, to allow Avala to outline the potential size and economic potential of the sediment-hosted gold system. -- In addition, the Jurassic limestone package has strongly anomalous gold in soil geochemistry where it is exposed in the Korkan-Bigar & Umka- Strnjak trends and numerous gold mineralized trench intercepts have been returned to date, hosted in limestone, which require drill follow-up in due course. -- Avala controls 100% of the 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/potoj-cuka-gold-belt 5. 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 metre sampling interval has been used where possible for the Sediment-Hosted 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 Sediment-Hosted 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 were 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 was routinely entered into geology and structural geology spread sheets using Field Marshal software for subsequent entry to 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 $37 million in its treasury at September 30, 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. Cautionary Statement The potential quantity and grade described in this press release are conceptual in nature. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the Korkan-Bigar target area being delineated as a mineral resource. 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 nature of the mineralization of the project, the results of the exploration activities and interpretation of such results, the gold potential of the project, the potential size of the sediment-hosted gold system, the suggested similarity to the style of gold mineralization of the North Carlin Trend project and the similarities suggested and with 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. Figures 1 and 2 are available at the following address: http://media3.marketwire.com/docs/Avala_Figures_1_2.pdf Figures 3 and 4 are available at the following address: http://media3.marketwire.com/docs/Avala_Figures_3_4.pdf Figures 5 and 6 are available at the following address: http://media3.marketwire.com/docs/Avala_Figures_5_6.pdf Tables 1 to 4 are available at the following address: http://media3.marketwire.com/docs/Avala_Tables_1017.pdf
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